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Although I have been one of the more vocal opponents of the Oneweb project based on commercial, regulatory, technical and logistical grounds, I was stunned to read the news on Bloomberg last week that Oneweb is considering bankruptcy.

This company is backed by one of the most successful and largest investors in the internet and telecommunications sector, Softbank. After having raised over $1 billion and armed with a claim to an ‘exclusive’ NGSO Ku-band ITU1 regulatory filing, it seemed inevitable that Oneweb’s satellites would blanket the skies of the world, much to the chagrin of operators of satellites in the geostationary orbit (GEO).

With its early mover advantage and the strong backing of famous investors, Oneweb should have been able to raise the remainder of the funding needed to complete the satellite constellation and the ground gateways. Perhaps the elephant in the room called Starlink is taking up all the attention away from other LEO broadband opportunities or it maybe that the project didn’t compute economically from the perspective of the investors. If the Bloomberg article is true, it would be devastating news for all those involved in the project, including many smart and talented people who have been working there trying to make it a success.

Yet Oneweb wouldn’t be the only company to valiantly have tried for success in the low-Earth orbit (LEO). Companies such as Teledesic, Iridium 1.0, Globalstar 1.0, Skybridge and others raised and burned over $15 billion in investor capital over two decades ago. Based on these failures, it seems clear that LEO broadband is very difficult. It is not easy to create a new telecommunications industry from scratch, and having money – even billions of dollars – doesn’t guarantee success. Despite past failures, there seems to be no lack of enthusiasm for investment in this sector. I want to just ask one simple question: What problem is LEO broadband solving?

LEO promoters discuss the advantages of lower latency, high capacity and ubiquity of covering 3.5 billion people. Except GEO FSS2 satellites have been covering those 3.5 billion people for nearly 50 years, and the technology has evolved so much that cost of the high-throughput (HTS) GEO capacity to a 1-meter user antenna can be 1/10th per GB compared to that offered by highly-capacity LEO systems.

And even if the capacity is affordable and presently available, the 3.5 billion people still remain unconnected. Why?

Most rural residents in emerging markets live in sparsely populated areas with low population densities. These people have low income levels and it is rare to find reliable commercial electrical power. Mobile operators using 4G technologies do not find it economical to roll out their networks in these areas because the customer revenues would not repay the significant amount of capital required to erect a telco-grade tower, power systems, fibre backhaul and mobile baseband required to serve these areas.

GEO HTS local distributors currently have a hard time justifying an investment of a $500 consumer-GEO-HTS terminal in many of these areas. So how would a LEO network with their complex and costly phased-array terminals, which require a clear line of sight to all parts of the visible sky and hundreds of watts of electricity, be better than the GEO HTS services, which are already much simpler to operate, cost less and are more affordable?

I don’t understand the fundamental problem they are solving. It seems very clear to me that LEO terminals have to be more affordable and easier to use than GEO, and the airtime charges have to be much more attractive as well to stand a chance. When latency doesn’t matter to over 1 million US consumers who are using GEO HTS broadband, it certainly won’t matter to unconnected villagers in Asia, Africa or South America either. Thus, these LEO broadband systems currently planned for are not solving anyone’s problems.

Yet LEO broadband connectivity isn’t the only sector receiving investment. Since 2009, over $20 billion has been funnelled into over 400 New Space companies. Currently today, there are over 70 Earth-observation projects chasing what is rapidly becoming a commoditised imaging market. The long trail of tears in LEO seems like it will add a few more names. Many imagery companies are targeting imaging of 1-meter resolution and better. If these systems all launch, there will be so much abundant sources of imagery that it will be very difficult to make money in such a crowded market. Many of these projects look very similar each other, with no clear differentiation over services offered by established incumbents, who need to only drop their pricing to keep their clients.

For our space industry to thrive and grow, we need successes such as Google, Facebook and Apple did for Silicon Valley. They all found their niche and solved problems better than others. To the many aspiring entrepreneurs who are looking into space, they need to ask themselves one question: “What problem am I solving and how do I do it?” Otherwise they will chase fool’s gold. We are certainly bound to see huge successes in LEO – let’s hope they come sooner than later.